Student Loan Relief for Counselors: Counselors and specialists in mental health care provide patients with critical care and treatment. The care scope is wide, ranging from marriage and family counseling to mental health services to substance abuse.
Many psychologists and mental health specialist jobs require at least one bachelor’s degree, irrespective of the care specialization. It means a significant student loan debt for most students.
Luckily, counselors are provided student loan compensation options. Student loan forgiveness programs are put in place to encourage individuals to enter and stay in the profession for counselors and mental health therapists. Below are some options for student debt relief to be discussed.
Federal loan forgiveness for mental health counselors and therapists
The federal government offers student loan forgiveness for counselors or mental health therapists. There are two main programs to consider.
1. Public Service Loan Forgiveness
Public Service Loan Forgiveness (PSLF) may be the most talked about plan. PSLF provides complete student loan forgiveness after 10 years of service and 120 eligible installments for your outstanding student loan balance. Any portion forgiven is tax-free as well.
Counselors and mental health counselors also work for a service-providing non-profit, university, or organization, making them good candidates for PSLF. To be eligible, one of the following organizations must work full-time:
- Government organizations at any level (federal, state, local or tribal)
- Not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code
- Other types of not-for-profit organizations that are not tax-exempt under Section 501(c)(3) of the Internal Revenue Code, if their primary purpose is to provide certain types of qualifying public services
Along with a qualifying employer, you need to make sure you’re on a qualifying repayment plan.
A qualifying repayment plan means you’re enrolled in an income-driven repayment plan. These include:
- Income-Based Repayment (IBR)
- Income-Contingent Repayment (ICR)
- Pay As You Earn (PAYE)
- Revised Pay As You Earn (REPAYE)
Within PSLF, only federal direct loans can be forgiven. If you are in possession of federal PLUS loans or Perkins loans, you will need to take a few different steps to qualify them for repayment. With a Direct Consolidation Loan, you can combine your PLUS loans. You are then prepared for the ICR program once you do this, and you can follow PSLF.
You will repay Perkin’s loans through a plan other than PSLF. The federal government has a program for the cancelation and discharge of Perkins Loan that provides up to 100% repayment of these student loans. Specific eligibility requirements apply, so when following this plan, make sure that you read the fine print.
2. Income-driven repayment plan
If your workplace is not eligible for PSLF, an income-driven repayment (IDR) plan may be considered. You need to be on one of the four IDR plans mentioned above for 20 to 25 years to earn forgiveness through revenue-driven repayment. The remaining balance of your student loans will be forgiven after making payments for the necessary length of time.
If your employer qualifies you for PSLF as an IDR program can be more expensive to you in two ways, it may be worth double checking. Next, on the amount that is forgiven, you will have to pay taxes. For some, that may be a big charge. Second, you’re going to pay at least twice as much as you’d pay for PSLF. That’s more cash out of the bag.
Before deciding on a federal loan forgiveness program, you’ll want to review the loan forgiveness programs at the state and national level specific to counselors and mental health professionals.
National and state student loan relief for counselors and mental health therapists
There are areas all across the nation in need of mental health professionals and counselors. To fill this need, programs have been established that offer student loan forgiveness or repayment as an incentive to serve in the community with a shortage.
3. National Health Service Corp Loan Repayment Program
The National Health Service Corp (NHC) Loan Repayment Program offers student loan debt relief if you agree to work in a Health Professional Shortage Area (HPSA) for a minimum of two years.
It’s available to mental and behavioral professionals who work in a qualifying discipline. The qualifying disciplines for mental health include:
- Health Service Psychologist
- Licensed Clinical Social Worker
- Licensed Professional Counselor
- Marriage and Family Therapist
- Mental and Behavioral Health
- Psychiatric/ Mental Health
- Psychiatric Nurse Specialist
The amount you can have forgiven depends on the level of need at your worksite. You can receive up to $50,000 of student loan forgiveness for working full time. If you choose the half-time option, you can receive a max of $25,000 of student loan forgiveness. To find out more and complete an application, go to the Health Resources and Services Administration (HRSA) website.
4. Mental Health Loan Assumption Program
If you live in the state of California, you have the opportunity to apply for the Mental Health Loan Assumption Program (MHLAP). This program is open to a wide range of mental health professionals, including:
- Registered or Licensed Marriage and Family Therapists
- Registered or Licensed Clinical Social Workers
- Licensed Professional Clinical Counselors
- Licensed Professional Clinical Counselor Interns
You must be registered or licensed in the state of California before you apply. On this plan, you can receive up to $10,000 of student loan forgiveness for one year of service. Locations vary and are based on need. You can find the direct contact by area in the MHLAP County Director Contact list.
5. State Loan Repayment Program
Even if you don’t live in California, your state may have a loan forgiveness program for mental health therapists or counselors. More than 30 states receive cost-sharing grants from the HRSA to operate a State Loan Repayment Program (SLRP). Eligible disciplines vary state by state based on need and funding but may include any of the following for mental health:
- Health service psychologists
- Licensed clinical social workers
- Licensed professional counselors
- Marriage and family therapists
Your minimum commitment of service is two years, with some states offering extensions to the contract for additional student loan forgiveness. To find out more about your SLRP, reach out directly to your state’s contact representative.
The expectation of job growth for counselors and mental health therapists is 23%. This is good news along with HRSA adding accredited counselors and clinicians to some of the major programs for student loan forgiveness.
You can change your plans and income as you advance through your career. While deciding which student loan repayment option to want, you will want to plan for the future.
- The Pros and Cons of Working While in College
- What is a Work-Study Program?
- Federal Student Loans Guide
- Advantages and Disadvantages of Democracy
How do counselors and mental health professionals plan for the future with student loan debt?
You’ll also want to weigh your future plans and run the numbers while looking at your student loan repayment options. To counselors and psychologists, PSLF is a good option, which is why it is first mentioned here. That said, in ten years, a lot can happen.
Let’s presume you signed up for PSLF in 2018 and as a marriage and family counselor receive $50,000 per year. You already have a loan balance of $70,000 with an average interest rate of 5 percent. Your monthly payment on the REPAYE or PAYE program would be $265 a month. This jumps to $397 a month if you’ve been enrolled in the IBR payment plan.
If you get married down the line, depending on your spouse’s income and how you choose to file your taxes, your IDR payments may be affected. During these 10 years of PSLF contributions, your decisions will affect how much you pay for your student loans.
Although PSLF is flexible for significant amounts of student loan debt, filing paperwork and making payments is a long time. The NHSC and HRSA propose loan forgiveness much shorter terms of service than PSLF. If you have the opportunity to complete this form of loan forgiveness and do so would eliminate most of your debt, the best option would be one of those services.
Find a student loan relief plan for your life
Anyone who works in mental health should not struggle to pay their debt to the student loan. Counselors and counselors in mental health treat other traumas throughout the day. Student loan debt adds to this emotional weight.